The public sector is facing some of the most aggressive spending cuts and efficiency targets in recent memory. Towards the end of last year the government announced a savings target of £35bn, with a lot of emphasis placed on reducing the multi-billion pound IT bill.
Combine this with a predicted £50bn cut in public spending as well as the encroaching costly carbon reduction commitments and it is easy to imagine public sector managers holding their hands up in despair.
Outsourcing as a cost cutting strategy has had a murky past within the public sector. Massive IT deals have ended up costing tax payers more money, rather than relieving pressure on public sector coffers.
However, outsourcing has matured within government organisations in recent years. Shared services has proved to be mostly successful (especially within the NHS) and procurement procedures seem to be improving.
Despite the improved approach to outsourcing, government bodies have cringed at the thought of offshoring work. With such hefty targets, it is unlikely that adequate cost savings can be made by just handing work to UK based suppliers.
So the age old, incredibly heated, debate raises its ugly head once again: Should the public sector look to offshoring to cut costs?
There are a host of good reasons why the public sector would want to take advantage of offshoring. First and foremost, cost. Offshoring usually means at least a 10 percent decrease in costs, it also means taking advantage of a well skilled workforce so quality levels should be maintained, if not improved.
These savings could go a long way in helping organisations meet the strict cost cutting targets.
However, offshoring is never that clean cut, especially in regards to the public sector. The question of whether the government has a responsibility to keep jobs within the UK is always highly debated, with many believing it should run like a commercial organisation and try and minimise cost and in turn save taxpayers money.
Data security is also another touchy point when looking at offshoring. Key offshoring destinations such as India and China do not have the most stringent data security measures, so how will the public feel knowing that their national insurance details are held on a database in Bangalore?
However, it must be said that most catastrophic public sector data security breaches have occurred here in the UK; provided strict SLAs are set that replicate homeland protocol there is no reason why data would be safer in Birmingham than in Bangalore.
As the verdict isn’t out yet on public sector offshoring, the NOA is keen to hear the industry’s opinion on this and is calling upon members from all walks of business life to offer their opinion. The one thing the public sector can’t do is sit back and ignore a potentially significant cost saving initiative.
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